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San Diego Habitat for Humanity on Tuesday acknowledged that 2007 wildfire donations were spent on other purposes, although insisting the money went to causes directly related to its home-building mission.

The acknowledgment is the nonprofit’s latest response to lingering questions about what happened to more than $700,000 donated in the wake of the deadly firestorm.

Habitat executive Chris Marek said the staff wrongly deposited wildfire-relief donations into a general restricted account rather than a fund strictly earmarked for fire victims.

“There was no maliciousness here, but it was a complete lack of understanding on how restricted accounts work,” he said. “Donor funds were not used for donor intent.”

His comments Tuesday came three months after Marek and other local Habitat officials said an independent review of how the wildfire donations were spent was closed.

In July, the nonprofit released a one-page letter from an Orange County accounting firm that relied on 2010 financial records to conclude the wildfire donations were not missing.

That letter failed to satisfy county Supervisor Dianne Jacob, who complained at the time that Habitat needed to explain in fuller detail why no new homes were built with the wildfire donations.

After meeting with charity officials Tuesday, Jacob said she was not fully satisfied that long-running questions over the charity’s use of the funds were answered.

“The meeting confirmed what I have long believed: The organization botched their mission after the fires and the financial records are evidence of that,” she said.

Jacob commended Habitat for admitting its mistakes, but also said “an organizational overhaul” is needed.

“These are very egregious errors that undermine Habitat’s credibility and tarnish its name,” Jacob said. “It is in the best interest of our community that Habitat make changes necessary to restore its good name.”

The East County supervisor appears to have softened her position since April, when she publicly called on District Attorney Bonnie Dumanis to investigate the charity’s finances.

The District Attorney’s Office, which by policy neither confirms or denies the existence of investigations, has not responded publicly to the request.

In January, United Way of San Diego County requested a $257,000 refund of funds awarded to Habitat for Humanity. Other contributors also sought and received refunds of their donations to Habitat — The Beim Foundation got $27,000 and Macy’s received $15,000.

Habitat used a line of credit to make those payments, raising new questions about why the charity had to borrow money to repay the donations.

Up to $400,000 in wildfire donations has yet to be accounted for publicly. Marek said Tuesday that the 2011 audit is under way and would be released when it is completed, likely in December.

Bradford Bates, the nonprofit’s former chief executive, stepped down in April after less than two years on the job.

He sued the organization two weeks ago, alleging breach of contract, misrepresentation, fraud and other issues. Marek declined to discuss the lawsuit, saying those allegations would be addressed in court.

According to his lawsuit, filed in San Diego Superior Court on Sept. 30, Bates was misled by board members about the financial condition of the charity before he accepted the job in 2009.

“Plaintiff has learned that the board of directors covered up unfavorable audit reports and the true financial status of Habitat for the years ending June 30, 2007 and June 30, 2008,” the 26-page complaint states.

The suit also claims the agency kept records it knew were misleading or inaccurate.

“That’s no audit, it’s only for show,” the complaint quotes an interim executive telling Bates after he joined the staff.

Michael Huesca is a former Habitat employee who sued the charity for wrongful termination in April after he claimed to be fired for refusing to help hide what he said was impropriety within the charity. Habitat has yet to admit all of its mistakes, he said.

“They’re still caught up in covering up funds that were either misused or mismanaged,” Huesca said. “Until they legitimately come clean, this organization is not going to be able to heal.”

Marek pledged that the nonprofit is working to fix its problems.

“This organization is looking from top to bottom at all of our operations, including our board of directors and how we can move forward in a positive manner and be better stewards of donor dollars,” he said. “This organization needs to be much more transparent.”